Asian firms heat up big energy deals

Asia’s thirst for oil fields powered North American mergers and acquisitions to $26 billion worth of announced deals in the first quarter of 2012, up from $22 billion in the year-ago period, according to data from London-based research firm Evaluate Energy.

Among the deals, Mitsubishi Corp. set plans to buy EnCana
acreage for $2.9 billion in the Montney shale of British Columbia. Also, Sinopec
moved to purchase stakes in several Devon Energy
energy fields for $1.6 billion. The crown for the richest deal in the first quarter goes to New York-based private equity firm Apollo Group, which set plans to buy El Paso’s
exploration and production unit for $7.2 billion, along with other investors.

One factor fueling smaller deals is depressed natural gas prices which fell to multi-year low of about $2 per million British thermal units during the quarter, said Eoin Coyne, lead M&A analyst for Evaluate Energy. “Low natural gas prices are forcing some companies to sell,” he said in a phone interview. “They’re selling off rather than braving it out to wait for natural gas prices to go up. They don’t think prices for natural gas will improve for a while.”

Overall, assets in North America dominated the global deal value, with 79% of the total merger purse worldwide. The U.S. drew $17 billion in deals, while Canada got $9.2 billion.

Behind these bullish numbers, however, was dampened enthusiasm around shale gas acreage. “The excitement that greeted plays such as the Marcellus shale a couple of years ago has died down to a whimper,” Coyne said.

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